Big Cellphone Makers Shifting to Android System

Monday

Oct 26, 2009 at 1:31 PM

Microsoft has been making operating system software for cellphones since 1996, but it is losing users to Google’s Android.

SAUL HANSELL

Since 1996, Microsoft has been writing operating systems for little computers to carry in your pocket. It was a lonely business until the company’s perennial rival, Apple, introduced the Web-browsing, music-playing iPhone. But now that smartphones are popular, Microsoft’s operating system, Windows Mobile, is foundering.

More cellphone makers are turning to the free Android operating system made by Microsoft’s latest nemesis, Google.

Cellphone makers that have used Windows Mobile to run their top-of-the-line smartphones — including Samsung, LG, Kyocera, Sony Ericsson — are now also making Android devices. Twelve Android handsets have been announced this year, with dozens more expected next year. Motorola has dropped Windows Mobile from its line entirely in a switch to Android. HTC, a major cellphone maker, expects half its phones sold this year to run Android. Dell is using Android for its entry into the cellphone market.

All four of the largest carriers in the United States have now agreed to offer Android phones. When the first Android handset, the G1 from HTC, was introduced last fall, only T-Mobile offered it. Now, Verizon, the largest carrier, is putting a huge promotional push behind the Droid from Motorola, set to be introduced this week. Even AT&T, the home of the iPhone, recently said it would join the Android party next year.

Google is rapidly introducing updates to Android, each named after a bakery sweet. Version 1.5 (cupcake) came out in April, version 1.6 (donut) appeared in September. Version 2.0 (éclair) is expected to appear on the Droid.

“A lot of manufacturers are walking into our office and talking about how important Android is becoming to them,” said Cole Brodman, the chief development officer of T-Mobile, the first carrier to sell phones with Google’s software. “Android is ramping with more manufacturers and more price points. It is going to have a pretty significant impact.”

Android is on only 1.8 percent of smartphones worldwide, according to Gartner, and Windows Mobile software still dwarfs Android. But Microsoft is slipping. The percentage of smartphones using the Windows Mobile system has plummeted to 9.3 percent, from 12 percent in the second quarter of 2008. Microsoft fell behind Apple, which shot up to 13.3 percent, from 2.8 percent. (Nokia’s Symbian operating system is the world leader, followed by Research In Motion’s OS for its BlackBerrys.)

Android does have its share of doubters. “The industry has decided that Android is going to be a huge hit, but I’m skeptical,” said Tero Kuittinen, an analyst with MKM Partners. “To have legs, you have to be a hit. The first three Android devices didn’t connect with the mass market.”

Google’s software is intended for modern screens you tap with a finger, while Windows Mobile was built for use with a stylus. Android has attracted far more applications for consumers in the first year than Windows Mobile has in a decade. As a result, Android is winning over the world’s largest cellphone makers.

One part of the appeal is that, unlike other operating systems, Android is open source software, so anyone can use or change it.

“We have access to the source code,” said Sanjay Jha, the co-chief executive of Motorola. “To do that on any other platform would be very difficult.”

HTC, the Taiwanese cellphone company that has grown quickly in recent years making only Windows Mobile phones, also finds the customization attractive because Android phones allow users to add apps. “Customers are really embracing personalization, and Android brings that to the forefront,” said Jason Mackenzie, HTC’s vice president for North America.

Windows Mobile, by contrast, appeals more to corporate computing managers who like how it connects to Microsoft’s e-mail and office software.

“A year ago, we significantly changed our strategy,” said Andrew Lees, Microsoft’s senior vice president for the Windows Mobile effort. “Our value proposition is you can get your business and your consumer scenarios on the PC, and in a relevant way for you on the phone.”

But Microsoft has not announced a release date for Windows Mobile 7.

“You will see a speedy set of innovation for us in the next 6, 12, 24 months,” said Robert J. Bach, president of Microsoft’s entertainment and devices division at a news media event in New York to introduce a quick revision of the operating system called Windows Mobile 6.5. “Should we have picked up on the trends a little sooner? It’s hard not to say we should have,” he added.

So far, Microsoft has not been able to answer critics who say its operating system is old, slow and hard to use.

“Windows Mobile is simply dated, and that hasn’t changed in this release,” said Avi Greengart, research director for consumer devices at Current Analysis.

Indeed, a J. D. Power & Associates survey found that Windows Mobile had the lowest satisfaction rating among customers of any smartphone operating system. The iPhone has by far the most satisfying software, the study found. Android is a distant second, followed closely by BlackBerry’s operating system.

Windows Mobile scored below average on every attribute, said Kirk Parsons, director of the study, especially in ease of operation, speed and stability.

Android’s supporters say that in contrast, Google’s software and the devices that run it are evolving very quickly.

“They started with the base layer of capabilities,” Kevin Packingham, senior vice president for product and technology development at Sprint. “What was missing from the first generation was the user interface that really gets to consumers.”

Mr. Packingham said he was confident that Android phones would gain popularity.

“In the next year, there is the potential for Android to have huge growth and market share,” he said.

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